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MERGER WITH POPE RESOURCES | 9 Months Ended
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Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract] |
MERGER WITH POPE RESOURCES | MERGER WITH POPE RESOURCES On May 8, 2020, Rayonier Inc. and Rayonier, L.P. acquired Pope Resources and became the general partner of Pope Resources. Pope Resources was a master limited partnership that primarily owned and managed timberlands in the U.S. Pacific Northwest. Pope Resources also managed and co-invested in three private equity timber funds and developed and sold real estate properties. For additional information about the merger, see Note 2 - Merger with Pope Resources in the 2020 Form 10-K. The total purchase price was as follows:
Cash consideration | $247,318 |
Equity consideration | 172,640 |
Redeemable Operating Partnership Unit consideration | 106,752 |
Fair value of Pope Resources units held by us (a) | 11,211 |
Total purchase price | $537,921 |
(a) Based on the closing price of Pope Resources units on the NASDAQ on May 7, 2020. We recognized approximately $2.5 million, $13.5 million, and $0.4 million of merger-related costs that were expensed during the first, second and third quarters of 2020, respectively. See Note 24 — Charges for Integration and Restructuring for descriptions of the components of merger-related costs. The acquisition of Pope Resources was accounted for as a business combination under ASC 805, Business Combinations, (“ASC 805”). Pursuant to ASC 805, we recorded an allocation of the assets acquired and liabilities assumed in the merger with Pope Resources based on their fair values as of May 8, 2020. We completed our assessment of the fair value of the assets acquired and liabilities assumed within the one-year period from the date of acquisition. We recorded measurement period adjustments due to additional information received primarily related to higher and better use timberlands and real estate development investments, as well as timber and timberlands. As a result of refinements to the purchase price allocation, higher and better use timberlands increased by approximately $8.2 million. This includes development properties in the town of Port Gamble, Washington, development projects in Gig Harbor, Kingston, and Bremerton, Washington and various other assets. Additionally, refinements to the purchase price allocation resulted in an overall increase of $1.1 million to timber and timberlands, with the valuation of core timberlands decreasing by $15.5 million and Timber Funds timber and timberlands increasing by $16.6 million from the preliminary purchase price allocation reported in Note 2 - Merger with Pope Resources in the 2020 Form 10-K. As a result of refinements to timberlands preliminarily recorded values, we recognized the following decreases in depletion expense during the nine months ended September 30, 2021:
| Nine months ended September 30, 2021
| Pacific Northwest Timber |  |  |  | Timber Funds |  |  |  | Total
Depletion | ($182) |  |  |  | ($1,202) |  |  |  | ($1,384)
Total | ($182) |  |  |  | ($1,202) |  |  |  | ($1,384)
The fair values of the assets acquired and liabilities assumed were determined using the income, cost or market approaches. The fair value measurements were generally based on significant inputs that are not observable in the market and thus represent Level 3 measurements as defined in ASC 820, Fair Value Measurement, (“ASC 820”) with the exception of certain long-term debt instruments assumed in the merger that can be valued using observable market inputs and are therefore Level 2 measurements. See Note 11 — Fair Value Measurements for further information on the fair value hierarchy. The final allocation of purchase price to the identifiable assets acquired and liabilities assumed is as follows:
| Core Timberlands |  | Timber Funds |  | Total
Timberland and Real Estate Business |  |  |  |  |
Cash | $7,380 |  |  | $8,870 |  |  | $16,250 |
Accounts receivable | 2,459 |  |  | 1,787 |  |  | 4,246 |
Other current assets | 703 |  |  | 260 |  |  | 963 |
Timber and Timberlands | 498,630 |  |  | 449,073 |  |  | 947,703 |
Higher and Better Use Timberlands and Real Estate Development Investments | 34,748 |  |  | — |  |  | 34,748 |
Property, plant and equipment | 11,616 |  |  | — |  |  | 11,616 |
Other assets (a) | 3,737 |  |  | 2,194 |  |  | 5,931 |
Total identifiable assets acquired | $559,273 |  |  | $462,184 |  |  | $1,021,457 |
Accounts payable | 274 |  |  | 293 |  |  | 567 |
Current maturities of long-term debt | — |  |  | 25,084 |  |  | 25,084 |
Accrued interest | 244 |  |  | 275 |  |  | 519 |
Other current liabilities | 9,038 |  |  | 2,080 |  |  | 11,118 |
Long-term debt | 53,502 |  |  | 35,759 |  |  | 89,261 |
Long-term environmental liabilities | 10,748 |  |  | — |  |  | 10,748 |
Other non-current liabilities (b) | 2,724 |  |  | 461 |  |  | 3,185 |
Total liabilities assumed | $76,530 |  |  | $63,952 |  |  | $140,482 |
Net identifiable assets | $482,743 |  |  | $398,232 |  |  | $880,975 |
Less: noncontrolling interests | (3,816) |  |  | (339,238) |  |  | (343,054) |
Total net assets acquired | $478,927 |  |  | $58,994 |  |  | $537,921 |
(a)Other assets includes a $1.9 million intangible asset in connection with the Timberland Investment Management business. (b)Other non-current liabilities includes a $3.2 million deferred income tax liability resulting from the fair value adjustment to Pope Resources’ assets and liabilities. Pursuant to ASC 805, unaudited supplemental pro forma results of operations for the three and nine months ended September 30, 2020, assuming the acquisition had occurred as of January 1, 2020, are presented below (in thousands, except per share and unit amounts):
|  | Three Months Ended |  |  | Nine Months Ended
|  |  | September 30, 2020
Sales |  |  | $198,975 |  |  |  |  | $684,900 |
Net income attributable to Rayonier Inc. |  |  | ($1,110) |  |  |  |  | $25,800 |
Basic earnings per share attributable to Rayonier Inc. |  |  | ($0.01) |  |  |  |  | $0.19 |
Diluted earnings per share attributable to Rayonier Inc. |  |  | ($0.01) |  |  |  |  | $0.19 |
Net income attributable to Rayonier, L.P. |  |  | ($1,147) |  |  |  |  | $26,648 |
Basic earnings per unit attributable to Rayonier, L.P. |  |  | ($0.01) |  |  |  |  | $0.19 |
Diluted earnings per unit attributable to Rayonier, L.P. |  |  | ($0.01) |  |  |  |  | $0.19 |
The unaudited pro forma results include certain pro forma adjustments to net earnings that were directly attributable to the acquisition, assuming the acquisition had occurred on January 1, 2020, including the following: •additional depletion expense that would have been recognized relating to the basis increase in the acquired Timber and Timberlands; •adjustment to interest expense to reflect the removal of Pope Resources debt and the additional borrowings we incurred in conjunction with the acquisition; and •a reduction in expenses for the three and nine months ended September 30, 2020 of $0.4 million and $31.6 million for acquisition-related transaction costs. Pro forma data may not be indicative of the results that would have been obtained had these events occurred at the beginning of the periods presented, nor is it intended to be a projection of future results.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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